To register with the Spanish authorities as self-employed "autonomo", you will need to deal with the following:
- AEAT (Inland Revenue) for Income Tax and I.V.A.,
- Town Hall for the fiscal licence (I.A.E.), and opening licence, licencia de apertura, if you have business premises,
- Seguridad Social for social security (national insurance) purposes.
AEAT Inland Revenue Quarterly Return
You are required to keep proper accounting records and retain the documents for four years (sales invoices, till rolls, expenses bills, bank statements, employees payroll data etc).
The Spanish tax year runs from January 1st to December 31st and every three months returns (modelos) must be prepared for Income Tax and IVA.
We prepare these on your behalf. You should provide us with your accounting records on a monthly basis.
Every three months an IVA payment and an “on account” payment of income tax is made based on the profit for the quarter. The tax is 20% of the quarter´s profit. e.g. ¼ March 31st, 20% income tax and net IVA are payable by April 20th.
Some occupations can be on the modelo or objectivo system where you pay a fixed rate depending on the size of the premises, number of staff, electricity consumption etc.
IAE Fiscal License
Most businesses are now exempt from this tax since 2003. This local business tax was payable in September of each year to the Town Hall. We still register you but you do not have to pay anything unless your annual turnover exceeds € 1,000,000
Seguridad Social Contributions
This contribution covers self-employed persons for:
- National Health Services
- Maternity Pay
- Sickness Benefit
- Retirement Pension
But not the "paro": unemployment benefit.
Should you require workplace accident cover, please contact us.
Fifteen years contributions are necessary to qualify for a state retirement pension, 35 years for a full pension. 15 years would give a pension of 15/35ths of the full pension.
If 15 years contributions are not made then the contributions in Spain will enhance your UK pension benefits e.g. 20 years UK, 10 years Spain will give you 30 qualifying years in the UK.
The social security contributions are payable monthly with a 20% fine for late payment.
These contributions are tax deductible.
You must add IVA to the amounts charged to your customers. Every 3 months you are required to pay this IVA, less any IVA paid on business expenses, to the tax office. It is prudent to put the IVA you receive from customers into a separate bank account so as not to confuse it with your own funds.
For IVA to be recovered by you, business expense invoices should show the suppliers` NIF number, name and address and the same information for yourself. Bills in the name of your spouse or any other person are not allowable for tax purposes Please do not give bills to us that do not meet these requirements.
- The invoice should be dated, show the total of goods or services provided, the net amount, IVA percentage and amount and the invoice total.
- The actual document itself must be a ¨factura¨(invoice), not a ¨albaran¨ (delivery note), to be allowable.
- Most supermarkets will give you a proper IVA invoice on production of you NIE number or residencia.
- With petrol bills a service station will provide an IVA factura if you take the petrol bills to them on a monthly basis. Others will do it at the time of sale.
All employees should have proper contracts of employment. If you receive an inspection you could be liable to a fine for every employee without a contract. Non-Spanish employees should have a residencia.
- There is no such thing as casual labour.
If you change address, business occupation or operate another business we will need to inform the tax authorities. Please contact us should this be the case..
Cessation of Trade
Should you cease trading you must contact Farrand and Co immediately.
Unless the cessation forms are submitted to the tax and social security offices you will continue to be treated as self-employed: liable to pay the EUR 240 per month social security and to submit quarterly IVA and tax returns.
The minimum costs of failing to deregister are:
- 12 months social @ 240€ = 2,880€
- 4 IVA return penalties @ 150€ = 600€
- 4 tax returns = €600€
Total = 4,080€
This continues month after month until you deregister. Deregistration can only be backdated one month. Any assets you may have – car, house etc – will be embargoed for the debt.